You may be familiar with the term “lien,” but you may not know what to do when faced with a lien case. In this blog post, Northwest Lien lists the different types of liens in Washington state — and which applies to your unique legal situation. Want additional support navigating liens? Learn more about our lien services.
Liens in Washington represent a creditor’s legal claim on the debtor’s assets due to the debtor’s obligation to make a payment or settle a debt. A lien ensures a legal claim on the assets owned by the debtor so that the debtor cannot sell or transfer the property until all financial obligations have been met. So, put more simply: if someone didn’t pay you as they were legally obligated to, you have the right to force the sale of whatever other assets they have and take what you’re owed from the sale proceeds.
Liens are registered in a publicly accessible manner. If you also want to know the current status of your property, you can check the public lien records. However, the lien process differs according to the agreement between the debtor and the creditor and the type of debt — thus, the various types of liens.
There is a wide variety of different types of liens that may be found across the United States. Each lien serves a distinct function, which varies according to the region, industry, and circumstances of the situation. Each lien falls into a specific category and type. Liens in Washington, as in other U.S. states, are categorized as general or specific, voluntary or involuntary.
Common Types of Liens
A property lien can be defined as a legal action where a creditor obtains a debt due from a debtor through an interest in property. This property includes livestock, crops, vehicles (including cars and ships), fields (like timber), vineyards and gardens, property (including houses and hotels), and farm machinery.
A property owner can find any liens by searching on the property deed. This will show the owner the legitimate ownership over the property and the other legal claims on it. If the owner investigating the lien is also a debtor, notice or information may have been received from the creditor or legal authorities. However, it is important for property owners to search public records, as notice of a lien is not obligatory.
Mechanics’ liens, mortgage liens, tax liens, and judgment liens can all be considered different types of property liens.
Northwest Lien’s area of expertise! Washington mechanics’ liens, also known as construction liens, are a type of lien on the value of a property as payment for services provided. Contrary to the name, mechanics’ liens only apply to general contractors, subcontractors, laborers, or material suppliers who have provided goods or services to improve a property.
Under Washington’s mechanics’ lien laws, a person providing services in the construction field may file a mechanics’ lien when the property owner or general contractor has not provided the agreed payment in exchange for property construction services, such as the provision of materials, labor services, structural improvement work, use of equipment, etc.
Where a mechanics’ lien is filed, documentation that the work was completed or completed and delivered in the agreed quality must be filed within 90 days of delivery. This lien is a specific type of lien and can only be filed on property that has been serviced. Learn more about how to file a mechanic’s lien in Washington.
When it comes to receiving security payments, liens are typically the method of choice for contractors. Compared to a lawsuit for breach of contract, filing and enforcing a lien is both less expensive and takes a shorter time to complete.
Having a lien does not guarantee payment, so keep that in mind. Conversely, this makes it difficult for the property owner to sidestep paying the obligation or providing security.
A tax lien is a type of lien placed on property for non-payment of taxes to the government.
The legal action in Washington differs from other states because Washington is a tax-deed state rather than a tax-lien state. In other tax lien procedures, the lien is a legal claim on the property that prevents the owner from selling the property. In Washington, however, the liened property is sold at open auction and transferred to the new owner.
You can find the Washington tax lien procedure in Washington Code RCW 84. This law states that legal authorities will initiate lien proceedings on property if the property owner has not paid taxes for up to 3 years. After that action, the property’s tax deed is auctioned for sale, with the highest bidder at the auction becoming the owner of the tax deed. The new owner is obliged to pay the interest on the debt in addition to the debt owed to the state. Conversely, the property owner has to pay the value of the offer to the prior owner in order to transfer ownership.
In Washington, a mortgage pledge is created if a house is bought with a loan. A mortgage lien is a property claim that allows the bank or property owner to sell the property if the mortgage holder fails to make payments on the mortgage loan. Mortgages are defined as secured loans that provide for the direct lien of the property if the debtor fails to meet the terms of the loan.
In Washington, judgment liens allow creditors to take ownership of property owned by the debtor after the debtor breaks a contract. Many judgment liens are liens that the debtor did not agree to.
A judgment lien is a lien that arises because of a past court case that found the debtor liable for breaching express or implied contract terms. A judgment lien is promptly formed on the debtor’s property whenever the property in question is located in the same Washington district as the courthouse in which the judgment was issued.
However, if the asset belonging to the debtor is located in a different area, the borrower is required to register a judgment lien with the county clerk in the district in which the asset is situated. Per the laws of the state, a judgment lien cannot be placed on personal property; it can only be placed on real estate, and it stays attached to the latter for a period of ten years.
UCC stands for the Uniform Commercial Code (UCC). In the United States, business practices and procedures are governed by the Uniform Commercial Code (UCC). The UCC includes several regulations and laws that are commonly recognized.
The UCC is only applicable to the purchase and sale of goods, bonds, and other negotiable securities with comparable characteristics. UCC liens are attached to the assets of businesses. For instance, if a party loaned money in accordance with the UCC, that party has the right to demand the repossession of the borrower’s business assets in the event that the borrower’s firm falls.
UCC liens are required to be filed with the Secretary in Washington using the appropriate UCC type. UCC liens often become invalid after five years. Nevertheless, the creditor has the option of submitting a request to extend the lien. If the obligations are paid up before the end of the five-year period, the person who holds the lien may give notice to the creditor to have the lien lifted from the property.
General vs. Specific Liens
All types of liens in Washington fall into two additional categories: general or specific.
If the lien affects multiple properties, it falls into the general category. This permits the creditor party to recover the loan from the debtor using any of the debtor’s assets in the event of a default. When a general lien is issued against a debtor, it is connected to all of the debtor’s assets. Assets can include balances in checking and savings in bank accounts, property investments, vehicles, and other valuable goods.
If a lien is attached to a single property, however, it falls under a specific category. In this instance, the creditor party collects its debt exclusively from the contract-specified property.
Voluntary Lien vs. Involuntary Lien
A specific or general lien relates to the number of properties covered by the lien. In contrast, there is another classification of liens in Washington — voluntary or involuntary — that clarifies whether or not the debtor provides consent to the attachment of the liens.
Voluntary liens will often fall into a specific category of lien, while non-voluntary liens will often fall into the category of general liens. The logic behind this is that individuals are unwilling to pledge all of their assets as security for a loan or debt. A lien generated as a result of a home or auto loan is a typical example of a voluntary but specified lien. A judgment lien is an example of an involuntary and broad lien.
While Northwest Lien only files mechanics’ liens and notices in Washington, the process of filing any type of lien in Washington includes the same general steps:
Not everyone is permitted to initiate the lien process. If you are going to claim a mechanic’s lien, for example, you are only allowed to do so if you have contributed to the improvement of the property by providing services such as labor, supplies, or the use of equipment. You must have sent proper preliminary notice within the deadlines and ensure there are no construction lien waivers in place as well. Northwest Lien can help send a preliminary notice if needed.
Be careful with this one: if any of the required documents are either incorrectly or insufficiently filled out, your claim may be denied. For mechanic’s liens, Northwest Lien would be happy to fill out and file the lien on your behalf.
Your lien claim will now have a “lien record” as a result of this action. The filing of your lien claim is an essential step in the process of securing your lien.
However, if the property is located in more than one county, the lien filing needs to be recorded in each of the counties in which the property is located. There are three different approaches to registering or filing a lien. You have the option of filing in person, by mail, or electronically.
Recording and delivering your liens in person is the most dependable option because it allows you to have complete control over the associated fees. When you record it by mail, you need to double-check the lien costs to make sure there are no errors or mistakes. Electronic filings allow liens to be filed from a remote location, and the county auditor evaluates them before they are registered.
Nevertheless, to electronically file your lien, you will need to first open an account with a service provider that specializes in electronic recording.
The lien is then recorded by the county auditors. Notice of the lien must be received by the property owner within 14 days after the lien is recorded. Failure to send the notice will result in legal fees incurred in enforcing the lien. A lien on a property is something that no property owner desires. Because owners and prime contractors hate lien claims, they may negotiate payment after receiving a notice of lien.
This document notifies the owner or contractor that you intend to sue for non-payment. Some additional procedures are recommended by our partner attorneys to implement the Washington mechanic’s lien. We recommend that you cancel the lien claim after you receive your payment. The lien is removed using a recordable lien release form. You should also mention all mechanic’s liens on your property and request that the lien is removed.
If you’ve determined you need to file a mechanic’s lien in Washington state, Northwest Lien can help you understand the lien laws in Washington, ensure that all forms are filled out and submitted correctly and completely, and help you find an attorney in case the paperwork is difficult. Contact us with any questions, or order a lien or notice online now.